THE SNP have demanded that the UK Treasury returns £49.1 million of funding effectively removed from the Scottish Budget.
SNP MSP Kenneth Gibson – also the convener of Holyrood’s finance committee – raised the matter this week after a report revealed the scale of the impact of International Financial Reporting Standard 16 (IFRS) changes on the Scottish Government’s discretionary funding.
The UK public sector adopted the IFRS16 accounting standard in 2022, albeit with a three-year transition period.
It has resulted in a significant alteration to the accounting treatment for leases, with budgets now adjusted to align with that treatment – resulting in a loss of £8.9m in resource and £40.2m in capital funding, according to a Scottish Government official.
Scott Mackay, head of finance co-ordination at the Scottish Government, told the finance committee earlier this month that the UK Treasury previously committed to providing “ring-fenced budget cover”, but went on to say “clearly that has not happened.”
“It has cost us £8.9 million in resource and £40.2 million in capital, and the Treasury would not accept the full revised position,” he said.
"The cabinet secretary has raised the issue with the chief secretary to the Treasury many times, but we have not been able to secure that funding."
Mackay added: "The original principles of the arrangement were that the Treasury would provide ring-fenced budget cover such that the change should be budget neutral for departments, but clearly that has not happened.”
It was also stressed that whether this remains a one-off cost or becomes an ongoing expenditure still remains unclear.
Meanwhile, the SNP hit out at what the party called a “cash grab” – with Gibson saying that the UK Treasury is “denying” Scotland £49.1m.
“It is shocking that this bureaucratic change has enabled the UK Labour-led Treasury to deny Scotland £49.1 million,” he said.
“It is unacceptable that the Treasury is taking millions from Scotland through technical adjustments. This is money vital to our public services, including our NHS.
“The Finance Committee was told that the Scottish Government raised the issue with the Chief Secretary to the Treasury, but he has been unwilling to restore the funding.
“This again highlights the impact Labour’s mismanagement continues to have on Scotland’s public finances.
“Ultimately, Scotland would be far better served with full financial powers sitting with our Parliament, so we can protect Scotland’s public finances, and deliver the investment that people across Scotland and our public services deserve.”
The UK Treasury has been approached for comment.
